EU Deforestation Regulation (EUDR): Tracking Raw Materials to the Source

The EU Deforestation Regulation (EUDR – EU 2023/1115) is an EU mandate ensuring that specific commodities and products sold on or exported from the EU market do not contribute to deforestation or forest degradation. It entered into force in June 2023. Following an extension, the full application date is currently set for the end of 2025 for large enterprises and mid-2026 for SMEs.

For manufacturing companies in the food, consumer goods, and wood processing industries, the EUDR is not an abstract environmental goal—it is an operational due diligence requirement that demands seamless traceability from the raw material back to the specific plot of land.

Affected Commodities and Products

The EUDR covers seven primary commodity groups and all products derived from them:

• Cattle: Including leather, meat, and leather goods.
• Cocoa: Including chocolate, cocoa butter, and cocoa preparations.
• Coffee: Roasted, ground, and instant.
• Palm Oil: And derivatives used in food, cosmetics, and industrial products.
• Soy: Used in animal feed, food ingredients, and industrial raw materials.
• Wood: All products including furniture, paper, packaging, and charcoal.
• Rubber: Including tires, gloves, and technical rubber components.

For manufacturers in Central Europe, this directly impacts sectors ranging from furniture and food production to automotive suppliers and packaging manufacturers.

The Core Obligation: Due Diligence

Companies placing EUDR-relevant goods on the EU market must fulfill three core obligations:

1. Information Requirements

Companies must collect evidence proving that goods do not originate from land deforested or degraded after December 31, 2020. This requires geolocation data (GPS coordinates) of the specific plots, plantations, or forest areas where the raw materials were produced.

2. Risk Assessment

Based on the collected information, companies must evaluate whether there is a risk that the goods are non-compliant. The EU classifies countries into three risk categories: low, standard, and high.

3. Risk Mitigation

If risks are identified, mitigation measures—such as supplier audits, additional certifications, or switching sources—must be implemented before the goods enter the market.

Why Traceability is the Technical Foundation

The EUDR sets the highest traceability standards of any current EU trade regulation. Raw materials must be traceable to the parcel level. For a manufacturer, this means knowing exactly which material from which delivery was processed in which specific batch.

The Role of MES in EUDR Compliance

If you mix raw materials from different origins in silos or warehouses without batch-specific documentation, you cannot meet EUDR requirements. A Manufacturing Execution System (MES) that tracks material batches from goods receipt through every production step to the finished product is the essential tool here. Without digital batch tracking, EUDR compliance is not scalable and carries high legal risks.

Sanctions and Enforcement

Member states are responsible for enforcement. The regulation stipulates that sanctions must be effective and dissuasive, including:

• Fines of at least 4% of the company's annual EU turnover.
• Confiscation of the affected goods and any revenues generated from them.
• Temporary exclusion from public procurement processes and the ability to place new goods on the market.

Synergy with CSRD and Digital Product Passports (DPP)

The EUDR should not be viewed in isolation. The traceability infrastructure required for EUDR—batch-specific origin documentation and supplier risk analysis—is the same foundation needed for LkSG (Supply Chain Act) due diligence, CSRD Scope 3 reporting, and future Digital Product Passports. An integrated data strategy allows companies to meet multiple regulatory requirements with a single investment.

FAQ

What does "deforestation-free" mean under EUDR?

A product is considered deforestation-free if the land used for its production has not been deforested or experienced forest degradation after December 31, 2020. This "cut-off date" is fixed, regardless of when the product was purchased or processed.

How is geolocation data collected?

Suppliers must provide GPS polygons (for areas over 4 hectares) or GPS points (for smaller areas). The EU provides a satellite-based monitoring system to cross-check these coordinates against forest cover data.

What if a supplier cannot provide geolocation data?

If data is missing, the product cannot be legally placed on the EU market. This remains the most significant operational hurdle for companies sourcing from complex international supply chains.

Does the EUDR apply to recycled materials?

Recycled materials and waste are generally exempt from the EUDR, provided they can be proven to originate from the circular economy rather than new forest use. This creates a strong incentive for using certified recycled sources.